Rebalancing mode

Over time, portfolio positions vary in weight and must be rebalanced. Select a mode that best represent how the portfolio is managed.

Note: This setting is set independently for each portfolio, and is saved/restored with the portfolio.

Calendar rebalancing

Weights are adjusted back to their target on a regular basis. Rebalancing frequencies are shown below. Rebalancing is done on the last day of the frequency specified:

Yearly

Quarterly

Monthly

Trigger rebalancing

The portfolio is rebalanced when one or more of the positions weight drifts by more than a tolerance value, which is relative to the position weight. For example, a 40% position with 10% tolerance can drift by no more than 4% and will be rebalanced when it reaches 36% or 44%. You can select from:

100% tolerance

50% tolerance

25% tolerance

20% tolerance

10% tolerance

Note: in previous versions of the application, 'absolute' rebalancing was available, where the tolerance was calculated at the portfolio level. For example, a 40% position with 10% tolerance would be rebalanced when it reaches 30% or 50%. This approach is impractical because the smaller weight positions in the porfolio never get rebalanced.

Buy and hold

Positions are not adjusted during simulation.

If the portfolio is described with shares, there are two options for the initial makeup of the portfolio: Buy weights and hold (simulation starts with the target weights) or Buy shares and hold (simulation starts with the number of shares specified; weights are ignored) [explanation].

Custom rebalancing

If none of the options above are satisfactory, you can import a portfolio history. Learn more.

Viewing the rebalancing transactions

To view the details of rebalancing operations, you may either:

select the Value chart and click on 'rebal' to show the rebalancing dates

Transaction costs

Rebalancing does not take into account transaction costs. In reality, transaction costs include brokerage fees, taxable capital gains and front-end/back-end loads for mutual funds, which may negatively affect the performance.